One Saving Goal at a Time or Many?

Saving money may sound simple. Increase your income or reduce expenses, or some combination of both and you’ve got savings. I reinforce these ideas on this blog all the time. But, it’s not always that simple. Saving money doesn’t always work out the way we planned. Saving money takes discipline and sometimes setting goals. I recently established¬†my financial goals¬†for the short term (2-3 years). When I wrote out these short-term goals and put figures alongside these goals, I began to see how much it would cost to reach these goals.

Saving all of these figures within each designated time period seemed very difficult. Managing to save enough money to contribute towards my ROTH IRA is one thing, but paying for Mrs. 20’s graduate school at the same time takes a lot of effort. Remember that Mrs. 20’s and I don’t have a high income.

Like any debt repayment plan, these type of goals become more realistic if you can make them easy to grasp. A common way of accomplishing this is establishing how much I need to designate each month to reach these goals. As I was starting to break down these goals, I began to wonder if it is better to save towards one goal and achieve it first or work towards all of them at the same time.

Isn’t it the same?

This question may sound crazy to some of you. What I mean is some may not see why it would matter. I think it does matter. How about an example? Let’s say you have two goals of $500 dollars, one for a vacation and one for an IPAD. Okay, not the best things to save your money for, but nonetheless. You want buy the IPAD right before going on the trip, so the goals will be due at the same time. So, is it better to save for both of them at the same time or save for one first and then tackle the second one after the first one is accomplished. Does it matter?

Saving Isn’t Just About the Math

If there is one thing that I have learned, it is that saving is more than numbers. Saving is extremely psychological. It is about our connection to what it represents. Think about the saving goals. It isn’t just $1,000, is it? No, it is a vacation (granted, a cheap one) and an IPAD! These mean something to us! $1,000 by itself, without any understanding of what we can get for $1,000 means nothing.

Because this is true, saving for one thing at a time will almost always have better results. Many people call this the snowball effect. It is usually applied to debt, but the principle translates easily for savings as well. The idea is that if you save money for one thing and accomplish it, you will get excited about your success. It will then make the next goal seem much more achievable. Once you accomplish the first one, it means that the second one will come so much faster. Otherwise, if you focus on both goals at the same time, you may get overwhelmed. If you are saving for something important (like I am), try saving towards one thing at a time and work towards the others after you accomplish the first. I think you’ll be amazed at the results.

Have you had success with a savings snowball?

12 Responses to One Saving Goal at a Time or Many?

  1. I agree with you that saving for 1 goal at a time is more efficient!

  2. I personally like to do one goal at a time, because I can accomplish them so much easier and it just feels better when I do.

  3. I do multiple goals at one time, saving only the minimum that I need each month to reach the goal by the time it is due. I could easily switch to one at a time, but I’m not sure how I feel about that.

    It could be a psychological booster, much like a debt snowball.

  4. Kyle says:

    I’m currently saving for multiple goals right now (house down payment, wedding, honeymoon, and some smaller ones). I’ve thought about just saving for one at a time – I know it’s all psychological but I don’t know which one I’d feel better about. Maybe I’ll try saving for just one and see how that goes now that I’ve read this…

    Thanks for the morning internal debate :)

  5. We do both. We do multiple goals at one time but we also pick one where we will put any extra we have. It seems to work well and we make good progress.

  6. I save for multiple things at a time. It helps me stay focused on the bigger picture and encourages me to save more. :-) I can see though how doing it 1-at-a-time would be much easier and rewarding for people.

  7. Savings snowballs are so exciting. Especially when you have relatively small balance goals. It’s really fun to watch yourself go through the goals and then on to bigger ones.

  8. I have 3 savings goal going on at the same time. I find that it keeps me motivated and focused on different targets.

  9. 101 Centavos says:

    From time to time, we have old-fashioned cash jars in a kitchen cabinet. Having them there is a good visual reminder, and an exercise in will-power.

  10. I think it comes down to personality. Some people are great multi-taskers.
    For those, multiple goals might work!

  11. We did the debt snowball to pay off $29k in student loans and in March we’ll shift the snowball to our emergency fund and THEN to our Roth IRA. I agree with your thoughts on being more motivated/excited about knocking out one at a time. We could have made smaller payments on our loans and saved up our 911 fund at the same time, but our loans are just about gone and I don’t think we’ll miss them at all!

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